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The Chartered Market Technician (CMT) Association is a global professional organization for technical analysts in financial markets. The CMT Association offers a certification program that recognizes individuals who have achieved a high level of expertise in technical analysis. The CMT-Level-I (CMT Level I) Exam is the first of three exams that candidates must pass to earn the CMT designation. The CMT-Level-I Exam covers the basic principles of technical analysis and is aimed at individuals who are new to the field of technical analysis.
CMT Association CMT-Level-I exam is a comprehensive and challenging certification program for technical analysts. Passing the exam is an important milestone for professionals who want to enhance their knowledge and skills in technical analysis. The CMT Association's commitment to promoting the highest standards in technical analysis education and research makes the CMT certification program a valuable asset for professionals in the financial industry.
NEW QUESTION # 211
The indicator measures the distance between two exponential moving averages of advancing minus declining issues is the:
- A. Ayres-Hughes Breadth Indicator
- B. McClellan Oscillator
- C. TRIN
- D. SENTIX Index
Answer: B
Explanation:
Detailed Explanation:
The McClellan Oscillator is calculated by taking the difference between the 19-day EMA and the 39-day EMA of the daily Net Advances (Advances minus Declines).
NEW QUESTION # 212
Wave 4 can enter the top of wave 1 if:2425
- A. A motive wave is being formed26
- B. A sharper, complex correction is taking place
- C. A diagonal is being formed27
- D. A vicious bear market is taking place
Answer: C
Explanation:
Detailed Explanation:
One of the cardinal rules of Elliott Wave Theory is that Wave 4 cannot overlap with the territory of Wave 1.
However, the only exception to this rule applies when the pattern is a Diagonal (Leading or Ending Diagonal), where overlaps are characteristic.
NEW QUESTION # 213
A point & figure chart DIFFERS from a bar chart as:77
- A. A new plot on a point and figure chart is made only when the price ch78anges by a given amount
- B. Point and figure charts are only concerned with measuring price momentum
- C. Time intervals are clearly shown in a point and figure chart
- D. A new plot on a bar chart is made only when the price changes by a given amount
Answer: A
Explanation:
Detailed Explanation:
P&F charts are unique because they ignore time. A new 'X' or 'O' is plotted only if the price changes by a specific box size. If the price does not move enough, the chart does not update, unlike a bar chart which adds a new bar every time period regardless of price movement.
NEW QUESTION # 214
When analyzing long term price movements, it could be helpful to use _______ chart.
- A. A logarithmic
- B. An Equivolume
- C. A point and figure
- D. A candlestick
Answer: A
Explanation:
Detailed Explanation:141142
For long-term analysis, especially involving significant price changes, a Logarithmic (Log) scale is preferred because it represents percentage moves equally.
A move from 10 to 20 looks the same as 100 to 200, preventing distortion.143144
NEW QUESTION # 215
Indicators that measure what uninformed investors are doing are referred to as:
- A. Flow of funds indicators
- B. Cycle indicators
- C. Breadth indicators
- D. Sentiment indicators
Answer: D
Explanation:
Detailed Explanation:
Sentiment indicators (like the Odd Lot Short Ratio or Put/Call Ratio) attempt to measure the psychology of the crowd, often targeting "uninformed" or retail investors to use as a contrarian signal.
NEW QUESTION # 216
Xanjong Xu, CMT, left Welch Securities to join Charles Securities. He brought to Charles a listing of client contact information and a proprietary trading model that he helped develop while he was employed at Welch.
With respect to the MTA Code of Ethics, Xu's actions are:
- A. Not in violation of the Code
- B. In violation of the Code with respect to the client contact information, but not in violation with respect to the trading model
- C. In violation both with respect to the client contact information and with respect to the trading model
- D. In violation of the Code with respect to the trading model, but not in violation with respect to the client contact information
Answer: C
Explanation:
Detailed Explanation:
Unless Xu had explicit permission, taking proprietary client lists and proprietary trading models (intellectual property) from a former employer is a violation of the duty to the employer and standards of professional conduct. Both the client list and the model are considered property of Welch Securities6666.
NEW QUESTION # 217
Speculative stocks typically put on their best performance in which of the following markets?
- A. During the entire bull market
- B. In the early stages of a bear market
- C. In the final stages of a bull market
- D. In the early stages of a bull market
Answer: C
Explanation:
Detailed Explanation:
Speculative, lower-quality stocks often lag during the early quality-driven phases of a bull market. They typically outperform in the final stages (the "euphoria" phase) when investor confidence is highest and risk appetite is excessive6.
NEW QUESTION # 218
A trend-based trading system where the trend is the average of a pre-determined number of previous days closing prices is known as:
- A. An N-day breakout system
- B. A Point and Figure system
- C. A simple moving average system
- D. A linear regression slope system
Answer: C
Explanation:
Detailed Explanation:
This is the textbook definition of a Simple Moving Average (SMA)-taking the arithmetic mean (average) of the closing prices over a set number (N) of days14141414.
NEW QUESTION # 219
Which of the following is NOT a valid volume interpretation technique?
- A. Remove low volume periods
- B. Remove volume associated with large price moves
- C. Compare volume to open interest
- D. Construct volume moving averages
Answer: B
Explanation:
Detailed Explanation:
Volume spikes associated with large price moves (breakouts, climaxes) are critical signals of conviction and trend change. Removing volume associated with large price moves would strip the data of its most valuable information, making it an invalid technique8.
NEW QUESTION # 220
Which of the following BEST describes the guideline of alternation?
- A. Expect a difference in the next expression of a similar wave
- B. The longest impulse waves alternate between wave 3 and wave 5
- C. Fibonacci retracements alternate between 38.2% and 61.8%
- D. Bull markets alternate with bear markets
Answer: A
Explanation:
Detailed Explanation:
In Elliott Wave Theory, the Guideline of Alternation states that the market does not repeat the same type of corrective pattern consecutively. If Wave 2 is sharp and simple, expect a difference in Wave 4 (likely sideways and complex)35.
NEW QUESTION # 221
Shorter moving averages:
- A. Produce fewer whipsaws
- B. A and B
- C. Produce more trades
- D. None of the above
Answer: C
Explanation:
Detailed Explanation:
Shorter moving averages (e.g., 10-day or 20-day) hug the price action closely. This sensitivity results in frequent crossovers, leading to more trades (Option A). Unfortunately, this also increases the likelihood of
"whipsaws" (false signals in sideways markets), contradicting Option B.
NEW QUESTION # 222
MACD line is calculated by:91
- A. Subtracting the 26-d92ay simple moving average from the 12-day simple moving average
- B. Subtracting the 26-day exponential moving average from the 12-day exponential moving average
- C. Subtracting the 12-day exponential moving average from the 26-day exponential moving average
- D. Subtracting the 12-day simple moving average from the 26-day simple moving average
Answer: B
Explanation:
Detailed Explanation:
The standard formula for the MACD Line is: 12-day EMA minus 26-day EMA. (Fast EMA - Slow EMA).
9394
NEW QUESTION # 223
Top-down analysis refers to an analysis of:
- A. The overall economic and business condition
- B. Company fundamentals
- C. Monetary policy
- D. A specific government, company, (or) asset
Answer: A
Explanation:
Detailed Explanation:
Top-down analysis begins with the "big picture." It starts with the overall economic and business condition (macroeconomy), then moves to sectors/industries, and finally selects individual stocks/assets.
NEW QUESTION # 224
The chart formation highlighted below is:
- A. A triple bottom
- B. A head and shoulders top
- C. A head and shoulders bottom
- D. An island bottom
Answer: C
Explanation:
Detailed Explanation:
The chart shows three distinct troughs. The middle trough (Head) is lower than the left and right troughs (Shoulders). This "Inverse Head and Shoulders" is a Head and Shoulders Bottom reversal pattern.
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NEW QUESTION # 225
What is the advantage for the companies of selling equity to investors over bonds and notes?
- A. Equity is more liquid than bonds or notes
- B. Investors tend to buy equity more than bonds or notes
- C. Equity need not be purchased back
- D. Equity gives voting rights to investors
Answer: C
Explanation:
Debt (Bonds/Notes) is a liability that must be repaid with interest.
Equity (Stock) represents ownership; the capital raised does not need to be paid back to the investors, providing permanent capital for the company.
NEW QUESTION # 226
Sentiment data may include:
- A. Point and figure reversals
- B. Moving averages
- C. Results of investor polls and surveys
- D. Momentum oscillators
Answer: C
Explanation:
Detailed Explanation:
Sentiment indicators measure the psychological state of market participants (bullishness vs. bearishness).
Investor polls and surveys (like AAII or Investors Intelligence) are direct measures of sentiment. Options A, B, and C are price/trend indicators.
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NEW QUESTION # 227
Which of the following is a CORRECT Point and Figure chart pattern interpretation?
- A. Upside breakout above an ascending triple top generates a sell signal
- B. Upside breakout above a bullish resistance line generates a sell signal
- C. Downside breakout of a bearish triangle generates a sell signal
- D. Downside breakout below a bearish support line generates a buy signal
Answer: C
Explanation:
Detailed Explanation:
In Point and Figure analysis, a Bearish Triangle is a pattern of lower highs and higher lows (coiling) where the breakdown is expected. A downside breakout (move below the previous O column low) constitutes a valid sell signal32.
NEW QUESTION # 228
Which of the following DOES NOT have a trader involved in selling?
- A. Primary Market
- B. Secondary market
- C. Options Market
- D. Futures Market
Answer: A
Explanation:
Detailed Explanation:
In the Primary Market (IPO), the securities are sold directly by the issuing company (via underwriters) to investors to raise capital. There is no "trader" involved in the selling side; the seller is the issuer. In secondary, options, and futures markets, the sellers are other traders/investors.
NEW QUESTION # 229
Violated support levels typically:
- A. Are associated with declining price projections
- B. Indicate an imminent price reversal139
- C. Become support levels as prices fall lower
- D. Become resistance levels on price bounces138
Answer: D
Explanation:
Detailed Explanation:141
This is the principle of Polarity. Once a support level is broken, the market142 psychology shifts. Investors who bought at support are now losing money and will look to sell if the price rallies back to "break even." Thus, the broken support becomes resistance.
NEW QUESTION # 230
The chart type which integrates volume directly into the price bar is the:
- A. Renko chart
- B. Ichimoku Cloud chart
- C. Equivolume chart
- D. Value Weighted Average Price chart
Answer: C
Explanation:
Detailed Explanation:
Equivolume charts (developed by Richard Arms) replace standard bars with boxes. The height of the box represents the high-low range, and the width of the box represents the volume for that period.
NEW QUESTION # 231
Which of the following is NOT an underlying assumption of technical analysis?
- A. Supply and demand determines price
- B. The consensus is always wrong
- C. Prices move in trends
- D. Price discounts everything
Answer: B
Explanation:
Detailed Explanation:
The three core assumptions of technical analysis (Dow Theory) are: 1) Prices move in trends, 2) Market action discounts everything, and 3) History repeats itself. While "contrarian investing" exists, the idea that
"the consensus is always wrong" is NOT a foundational assumption of technical analysis (in fact, trend following relies on the consensus being right for the duration of the trend).
NEW QUESTION # 232
As a general rule, in rectangle, triangle, flag and pennant patterns, volume GENERALLY:2
- A. Decreases as the pattern develops4
- B. Stays constant as the pattern develops5
- C. Increases as the pattern develops3
- D. Shows signs o6f accumulation
Answer: A
Explanation:
Detailed Explanation:
During the formation of consolidation patterns (triangles, flags, etc.), market interest typically pauses. As the trading range tightens, volume tends to decrease (dry up). Volume should then expand noticeably on the breakout to confirm the new move.
NEW QUESTION # 233
Oscillators are used to alert the analyst to:125126
- A. Volume divergences127128
- B. Overbought or overso133ld price conditions134
- C. Continuation patterns129130
- D. Extended rallies131132
Answer: B
Explanation:
Detailed Explanation:136
While oscillators have m137ultiple uses, their primary "alert" function is to identify extremes in market momentum, known as overbought (too high) and oversold (too low) conditions, where the risk of a reversal is elevated.
NEW QUESTION # 234
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